Trade alert on athenahealth (ATHN) put roll

By
A A A

Shares of athenahealth Inc. (NASDAQ: ATHN ) are in the red after opening the session up without any news from the physician business services company. Options action during morning trading suggests one investor expects the downside to continue for at least one month longer.

At 9:59 a.m. EDT, a block of roughly 5,000 August-September 22.5 put spreads changed hands as part of a bearish put roll. Current open interest in the August and September puts is 6,200 contracts and 420 contracts, respectively. The front-month options traded for 20 cents per contract, which was closer to the bid price at the time of the trade, while the September 22.5 puts crossed the tape for $1 per contract (closer to the ask price when the volume hit the tape). This options action suggests the investor sold to close the August 22.5 puts and bought to open the September 22.5 puts to bet that the stock has more room to drop during the near term. The investor paid a net debit of 80 cents to place this bearish bet.

This put roll will make money if the stock is trading below $21.70 at September options expiration. This trade could turn significant profits if the stock drops another 16%. If the stock is trading at zero at September expiration, the investor could collect a maximum profit of $21.70 per contract. It looks like the investor is willing to commit a hefty amount of capital (roughly $400,000 in total) to bet on further downside.

ATHN shares were trading down roughly 40 cents to $25.82 as of 10:22 a.m. EDT. The stock is trading roughly 17% higher than its' recent low of $22. The company did not announce any news today, but announced earnings figures of 12 cents per share on July 22. The company beat estimates by two cents.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Options

Referenced Stocks: ATHN

Karla Yeh

Karla Yeh

More from Karla Yeh:

Related Videos

Stocks

Referenced

100%

Most Active by Volume

28,148,034
  • $15.36 ▼ 0.52%
23,324,663
  • $8.27 ▼ 10.50%
23,240,404
  • $66.28 ▲ 2.17%
21,308,870
  • $26.45 ▲ 0.95%
17,223,523
  • $95.295 ▲ 0.27%
16,267,150
  • $51.31 ▼ 0.97%
15,451,213
  • $16.605 ▼ 2.67%
11,823,215
  • $4.35 ▲ 1.40%
As of 7/11/2014, 12:15 PM